Rebel and opposition groups did not attend the first meeting of a government committee that will examine the constitution on Tuesday in Colombo.
Hours before the meeting began, a soldier was killed in a mine attack in the northern Jaffna peninsula, the Sri Lankan military said.
Mahinda Rajapakse, the Sri Lankan president, told the 15-member multi-ethnic panel appointed by him to come up with a formula that may grant extensive devolution of power to minority Tamils.
Rajapakse said $1.25 billion would be made available for reconstruction efforts in the majority Tamil north and east of the country.
He did not go into details of how the money would be spent, but said other countries were also keen to participate in reconstruction efforts.
Rajapakse also reiterated that an invitation to the rebel Liberation Tigers of Tamil Eelam (LTTE) to enter negotiations with the government was still open.
"I have invited the LTTE to engage itself on this process," he said. "It is only by doing so that the aspirations of the Tamil people can be addressed, not through streams of blood and shattered limbs."
The Tigers, who want an ethnic Tamil homeland in the north and east, say that the government is not serious and accuse the military of attacks on Tamil civilians. They pulled out of talks in April.
More than 60,000 people have been killed in the island's Tamil separatist conflict since 1972.